Reliance Power, the country's biggest IPO fell flat on its face. Millions investing in the stock have had their dreams shattered. Reliance Power listed at Rs 430 versus its issue price of Rs 450; it showed a disappointing and unexpected opening. Many investors sold off the stock in desperation as it ran even lower to almost Rs 360.Udayan Mukherjee of CNBC TV18 says “Just work with a ballpark number of Rs 300. At Rs 300, the company would have a marketcap of something like Rs 68,000 crore - that would be 40%-42% of NTPC’s current marketcap. I think that is fair, the company does not have any power in the ground. NTPC has the entire capacity that Reliance Power wants to put up over eight years functioning, on ground today - not eight years forward. Give it 40% of that value today. At Rs 300, assuming Rs 80 of value, you are paying almost four times book for potential five years forward. You are paying 40% of a company’s value, which has already got the capacity in ground; which you want to achieve over eight years and I think that is fair enough. So for my money, Rs 300 is fair value for Reliance Power, Rs 450 is expensive and overvalued; Rs 550 is certainly pushing it.”
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Monday, February 11, 2008
Friday, February 1, 2008
Is it good to buy stock at IPO or to buy from market
It is much better to buy from the market since it is possible for one to analyze the past performance and the fundamentals of the company. In contrast, in a IPO it is very difficult to guess what the future holds not to mention the troubles one has to go through to get allotment.Find answer to this question at http://www.dstreetdirect.com
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